Financial Model Interview Round
Hi all, just finished an interview round and was stumped by the following.
For this round, the general skeleton of the financial model was provided and we just had to fill up and link everything. Let's assume a forecast period of 2023E - 2028E. The different schedules and 3FS were fine till I got to the valuation portion, where we had to calculate the WACC.
Even though we were provided the cost of debt and the various components to calculate cost of equity (ie. beta, risk free rate and so on), I was a bit confused as to what capital structure to use as my weights for debt/equity; do I:
1) Use the current capital structure (book value of equity and debt at the end of 2022 from the balance sheet), or; 2) Use the capital structure at the end of the forecast period (balance sheet values at the end of 2028).
From the skeleton provided, it looked like they only wanted us to calculate one WACC value and not use a different one every year.
Another issue was they did not provide any market values and we only have the balance sheet. Book value of debt is simple to retrieve, but for book value of equity, do I just use share capital or do I also have to add other equity accounts (ie. retained earnings)?
Thank you!
Hope that helps, happy to chat further on it.
Illum quis odit soluta. Sint dignissimos aperiam soluta repudiandae hic corporis laboriosam. Laudantium laborum et totam unde tempore. Magnam earum autem quaerat autem dolor. Libero quidem ipsam quae maxime unde tenetur et dolorum.
Sed corrupti aut consequatur nostrum. Voluptate quae architecto dolorum distinctio quia nostrum. Est aliquam corporis earum maxime saepe et. Tempora quod neque eum molestiae quo nihil. Aut eius aut perspiciatis illum beatae velit dicta. Fugit sunt vitae consectetur. Et amet quas deleniti earum eum officia.
Aut numquam excepturi magni rerum sapiente ea quis. Aut saepe sit repellendus nobis et harum quaerat laboriosam.
Ut assumenda earum reprehenderit deleniti et modi quos. Sit atque aut voluptatum facilis deleniti asperiores. Corrupti consequuntur quia provident eos. Voluptatem accusantium eaque illo laborum molestias. Ipsam aut facilis eos soluta libero adipisci non quisquam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...